Monday, May 14, 2012

HR Analytics for business performance

Brief: Talent Analytics is about understanding and making sense of
workforce data to make decisions about people with the aim of aligning people
decisions to business strategy. This article attempts to analyze what is talent
analytics, how it is different from traditional human capital analytics, and
where HR people are required to turn their focus.

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Talent Analytics or Human
Workforce Analytics is the way by which data is analyzed to generate insights
on meeting the complex needs of the HR and business challenges and thereby
enabling high performance organizations. In the traditional HR role, the expectation
was to somehow manage the people processes through insight and interpersonal
relationships. Thus the complex understanding of organizational and human
dynamics happens by a most subjective process of hearsay, observation and
interpretation.

Though the field of Business
Analytics has made great strides in the recent years, HR processes have not yet
caught up to the task of analyzing these complex dimensions to make decisions
on talent management, be it acquisition, development or retention. The typical
tasks that would fall under these heads would be assessing capabilities,
identifying leadership behaviours, predicting performance indicators or
studying retention patterns. Leveraging on analytics would mean an improvement
in workforce planning, alignment of organizational capabilities, improvement of
business strategies and the like, all of which lead to improves organizational
performance.

Companies like Accenture are
taking the lead in defining what is human analytics and developing an approach
that would help companies answer some critical people-related questions on what
programs really drive better workforce performance, what organizational and
talent levers impact performance and efficiency, how to retain top performers
etc.Companies like IBM have developed Talent analytics software that provides
insight into recruitment, learning, skills, succession and retention.

In understanding what is Talent
Analytics, it is important to review what gets measured in the name of metrics
related to human capital. HR managers take pride in estimating their employees cost
of hiring, turnover rate, replacement rate, contribution to bottomline, all of
which do not have much strategic importance. They are useful in managing people
and information, not in creating value to the organization.

The shift that is required is
from managing efficiency to creating effectiveness. To give an example, most
organizations measure employee satisfaction levels or customer satisfaction
levels. Providing this data to the top management is not enough if HR wants to
be a strategic partner in managing the business. The next logical step would be
to understand what type of management or employee behaviours influence this
level of satisfaction, what is the level of increased aspired, hence what are
the behaviours that are required to improve the quality of employee or customer
experience and finally, what would be the impact of this increased satisfaction
on the company’s performance.

And ultimately, employee and
client satisfaction do not mean anything by themselves unless they result in
business performance, increased market share and profitability. Talent
analytics helps in mapping how well the workforce is meeting the needs of its
business, how they are aligned to the vision of the business, to identify ways
in which a high performing employee will continue to contribute to the
well-being of the company.

For instance, Thomas H Davenport,
in the HBR article “Competing on Human Analytics”, talks about how some
companies that are very high on valuing employee engagement can precisely
identify the value of a 0.1% increase in employee engagement among employees on
the performance of a particular store or brand. The transcript of his interview
relating to the article is found at http://blogs.hbr.org/ideacast/2010/09/talent-analytics-how-do-you-me.html

Talent metrics is the most objective way of
measuring what brings value to the organization, in fact, more objective than
employee performance measures. The role of HR in providing intuitive analyses and
creative thinking will still be required, but rather than applying it on
behaviour, they will be required to apply it on strategy.

HRMS by TenXLabs

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